Big offshore retailers flooding Trade Me with GST-free listings are the latest example of outdated tax laws putting Kiwis at a disadvantage, the national retail association says.
Seven of the site's top 10 "store" sellers were found to be offshore businesses, including Australian company Booktopia, which had a staggering 171,748 listings at time of writing.
Other stores with thousands of listings included US-owned companies Apparel Save and BHFO, selling discounted designer footwear and clothing.
Retail New Zealand public affairs manager Greg Harford said this showed big international companies were getting the upper hand over local businesses.
"These foreign firms are active in the New Zealand market, they're operating here and they're not paying tax like a New Zealand business would," he told the Herald on Sunday.
"There needs to be a level playing field."
Whereas offshore retailers weren't paying GST, some punters buying goods have to. Orders over about $225 usually require customers to pay tax when the goods came into the country.
"There could be some unpleasant surprises if the goods are stopped at the border," Harford said.
"If the consumer is buying something over the threshold then they could be charged GST, duty and processing fees on top of the price they've paid for the goods."
An IRD spokesman said online shoppers should refer to the Customs website to check whether they need to pay duty on their order. All listings on Trade Me checked by the Herald on Sunday recommended this, providing links to the Customs website whatsmyduty.org.nz.
Harford said the Government was missing out on millions of dollars in revenue because there was no requirement for foreign-based retailers to pay GST.
"We know two-thirds of all low-value goods come from the top 20 international retailers," Harford said.
"These are big firms, they've got the capability to pay tax and they should be required to do so."
Hartford said the Government should take its cue from Australia, which recently announced legislation requiring foreign retailers and online marketplaces to register for Australian GST.
"We think the Australian approach to GST on foreign suppliers is the right way to go.
"It's not perfect but it's a significant step forward."
Trade Me spokesman Logan Mudge and Inland Revenue confirmed that Booktopia and other offshore businesses were not required to register for GST under New Zealand tax laws.
Trade Me was not interested in becoming a tax collector or adviser, Mudge said.
"Any question about the consistency of the application of GST laws are best placed for the Government to deal with, not us."
Many international retailers were filling a gap in the market, he said, selling items that local businesses weren't offering.
However, he said the company's position had always been laws should be applied consistently online and offline.
"We'd support a regime that treats offshore sales and domestic sales fairly.
"We don't see it as an 'online sales' versus 'offline sales' thing, because Kiwi ecommerce sellers pay GST just like a bricks and mortar retailer."
The online trading site had no plans to clamp down on overseas businesses using Trade Me, unless there was a specific reason to.
Mudge said he was confident most companies were adhering to Trade Me's rules as well as New Zealand law and the company would deal with businesses individually if they suspected otherwise.
TradeMe top 10 sellers
1. The Nile: NZ-based, books
2. Betterbooks: NZ-based, books
3. Booktopia: Australia-based, books
4. Apparel Save: US-based, luxury clothing like Nike, Gucci, Asics
5. Sparesbox: Australia-based, car parts
6. Pertemba: UK-based, clothing, home & living
7. Southernskies: NZ based, books
8. AS Outlet: US-based, clothing
9. BHFO: US-based, luxury clothing like Calvin Klein, Ralph Lauren, Ryla
10. DeepDiscount: US-based CDs, DVDs, Blu-ray and vinyl